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Labor Shortage
Labor Shortage, Battle cry for licensed plumbers, Guide To Answering Basic Interview Questions

Contractors' labor shortage will affect manufacturers
OF CONTRACTOR'S STAFF ALBUQUERQUE, N. M. — If they're not already, plumbing manufacturers better start paying attention to the labor shortages facing their contractor customers.
"It will be harder to attract young males to be plumbers," consultant Carl
Cullotta of Frank Lynn & Associates told members of the Plumbing
Manufacturers Institute April 10 during their spring meeting here. "You may have to find other ways to get your products installed — design products so contractors can be more productive or so that someone else can install them."
Construction trades people historically leave the workforce early with an average retirement age of 55, he said in his presentation, "Changing Customer
Demographics and Their Impact on the Manufacturer." As a result, up to one- third of plumbers will leave the industry in the next decade, and this would result in a loss of experience and an erosion of brand loyalty as well as the labor shortage.
"There are 500,000 plumbers in the United States," Cullotta said. "How are they going to be replaced? Not only are they retiring with their skills but also with their brand loyalty."
That loyalty is important for manufacturers, he said, because plumbing contractors rarely switch brands or evaluate new ones. Contractors tend to react to problems with existing brands and suppliers and add new brands only incrementally over time. The reason they don't try more new brands, Cullotta noted, primarily is because of poor distributor service levels.
He predicted that contractors would start to hire more Hispanic workers to meet the labor shortage. Hispanic representation in the construction trades has more than doubled from 1993 to 2000, and Hispanics represent 15% of today's overall construction workforce, he said.
"At 14% of the plumbing contractor workforce, Hispanic employees are relatively under-represented," Cullotta said. "With the coming labor demand, it is likely that this percentage will increase significantly in the next decade.
"As manufacturers, you need to find a way to get to these plumbers early to gain their loyalty if they are Hispanic."
Among other changes that PMI members should know about their contractor customers, Cullotta noted, is that plumbing contractors are starting to exhibit
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Contractors' labor shortage will affect manufacturers

characteristics similar to builders. The average size of a contracting business has increased by 20% over the last five years with the top 1,000 plumbing companies increasing their share of market by targeting commercial work and large home builders. The remainder of the market remains highly fragmented with smaller firms focusing on custom builders and remodel/repair work.
"The bigs are getting bigger, partnering with builders," Cullotta said. "The contractors in the middle are disappearing. Small contractors are cementing their position.
"Divergent business models of the plumbing contractor demand manufacturers differentiate their go-to-market programs."
Manufacturers also may have to pick up more of the training load, he said, because unions will face a tougher time attracting and retaining members.
Today, as a skilled trade, plumbing has a stronger union representation than the overall construction industry.
"You may or may not like unions, but unions are a primary source of communication and education for the contractor," Cullotta said. "The burden for contractor education/training will shift to manufacturers and other industry participants."
Contractors' growing manpower problems coincide with an increasing shift away from do-it-yourself retail sales to "do-it-for-me" purchases where consumers are willing to pay for both the product and installation, Cullotta said.
Aging baby boomers will continue to define spending in the remodel/repair market, which will continue to expand, he noted.
"Home Depot is capturing the do-it-for-me dynamics," Cullotta told PMI members. "Home Depot's latest earnings report said that for the first time installed sales have affected its bottom line."
Big-box retailers such as The Home Depot and Lowe's have been responsible for more than 20% market growth in the remodel/repair market in the last 10 to
15 years, he said. During that time their sales and locations have tripled, and these retailers are reaching the saturation point where few areas remain to add stores.
Partly as a result, Home Depot is no longer driving change in the market, he said. Its purchase of Orlando, Fla.based wholesaling giant Hughes Supply in
January signaled a change in direction in how Home Depot is pursuing plumbing sales to professional contractors, he said.
"Home Depot is not changing the way Hughes does business," Cullotta said.
"It's not changing the way contractors buy."
The traditional distribution channel that moves plumbing products from manufacturer to wholesaler to contractor will continue to be important, he noted. Yet it won't be driving sales in the future either.
"The sales channel is nice, but it doesn't count," Cullotta said. "The end user will be more important than the sales channel. All evidence is pointing to putting much more emphasis on the consumer as the ultimate decision- maker."
Changing consumer demographics will make an impact on the residential
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